Distribution

The division distributes building materials and related products throughout New Zealand under the PlaceMakers brand. It is the market leader in its core trade segments and provides an important distribution channel for Fletcher Building products. There are 60 stores, most of which are operated in partnership with local owners.

Performance

Sales growth slowed to 2 percent, reflecting a general slowdown in the New Zealand market, particularly in the retail sector and in the number of residential building consents.

Growth was supported by the branch development programme, but the associated development costs, along with rising costs for energy and labour, increased operational expenses. Margins were subject to pressure resulting from ongoing competition and industry reaction to the market decline. As a result, operating earnings were down by 9 percent.

The ratio of working capital to sales improved, with stock levels falling despite increased shelf capacity in the new stores.

Capital expenditure for the year was $32 million, mainly on the store upgrade programme and a new information system. The investment in information systems will allow the replacement of some ageing hardware and develop new technologies to improve business processes for customers.

The marketing programme continued to emphasise the relationship with trade customers while building retail sales via a monthly mass media programme. The LIFT trade customer loyalty programme retained its momentum, with more than 450 builders participating in two building conferences.

Frame and truss manufacturing is an essential feature of the division’s offering, provided mostly through in-house manufacturing. There has been a concerted focus on improving returns from these plants through measurement and benchmarking of costs, productivity and volumes.

Looking to the fundamentals

The following projects were completed during the year:

  • relocation of the Thames branch
  • the opening of a new depot facility at Ohakune
  • the establishment of a new frame and truss manufacturing facility in Christchurch
  • upgrades at the Huntly, Wairau Park, Dunedin and Cranford St stores

In addition, a site was purchased in Warkworth for a new depot facility and construction began for a new facility in New Plymouth.

As in the past, the branch upgrade programme provided much improved retail facilities, but continues to be focused principally on improving yard access and drive-through facilities, which are a service to the division’s trade customers.

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During the year it was decided to accelerate the development and implementation of the national manufacturing strategy, which seeks to leverage the scale, and improve the operational effectiveness, of the national network of 22 frame and truss operations.

Pre-cutting the studs, plates, dwangs and lintels ready for assembly at the wall framing machines. The new state-of-the-art machinery means most cutting is 'hands free'

The regional rationalisation will facilitate the implementation of best practice plant and processes to improve safety and reduce waste and cost. The first major milestone in this strategy was the successful implementation of the new Christchurch frame and truss operation. The facility, which boasts a 3,250 square metre purpose built factory as well as a 300 square metre detailing office block, opened on time and within budget in January 2008. This allowed the closure of two older and smaller regional facilities.

The new facility features state-of-the-art cutting capabilities including a linear saw capable of cutting over 2,000 components a day and advanced pressing equipment capable of producing trusses of up to 18 metres in length, all of which will allow for safer, more efficient and higher quality production. Despite being operational for only six months by the end of the year, the site is already achieving its targeted performance objectives and service levels, and is the model upon which any future large regional plants will be based.